1. Fraud is established by deceiving another person to make a mistake by inducing a dispositive act and thereby causing a dispositive act to obtain property or pecuniary gain. There must be causation between deception, mistake, and property disposal act. Meanwhile, whether a certain act constitutes deception that causes a mistake to another person, and whether there exists causation between such deception and property disposal act should be determined generally and objectively in consideration of the transactional situation, other party’s knowledge, character, experience, occupation, and other specific circumstances at the time of the act (see, e.g., Supreme Court Decisions 87Do1872, Mar. 8, 198; 2011Do8829, Oct. 13, 2011).

2. The summary of the facts charged of the instant case is that even if the victims received investments for the operation of the instant car page from the victims, the Defendant did not have the intent or ability to pay the profits or return the investments to the victims. On March 2010, the victim Nonindicted 1 paid KRW 500,000 per month for six months after opening the opening point and paying KRW 250,000 per month, and the amount of the investment will be returned after two years after using the full amount of the car page as the deposit. The Defendant shall receive KRW 50,000 from the victim Nonindicted 2 on April 29 of the same year, and on April of the same year, the Defendant shall receive KRW 40% of the monthly profits from the investment in the instant car page, and return the investment funds after using the full amount of the deposit, etc. from April 19 to April 26 of the same year.

3. In light of the circumstances stated in its reasoning, the lower court reversed the first instance judgment convicting the Defendant of the instant facts charged and acquitted the Defendant on the ground that it is difficult to recognize that the Defendant, by deceiving the victims of the intent to defraud the investment money from the victims or caused any mistake to pay the investment money.

4. However, we cannot accept the above judgment of the court below as it is.

A. First, the lower court acknowledged the following facts in full view of the admitted evidence.

1) Around October 2007, the Defendant established the instant company for the purpose of business such as planning and management of performances, and operation of a camera. From September 2008, the instant company entered into a contract on joint operation and investment with multiple individual investors by workplace, and opened and operated the instant camera in the order of the distribution store, the art hall, the art hall, the art hall, the art hall, the art hall, the art hall, the Seoul store, and the instant camera.

2) On April 2010, the Defendant received KRW 50 million from Nonindicted 1, the victim Nonindicted 2, KRW 75 million from the victim Nonindicted 3, and KRW 75 million from Nonindicted 3 as their respective investments in relation to the joint operation of the instant car page. The major contents of each investment contract concluded between the instant company and the victims, and Nonindicted 3 were to distribute profits from the operation of the instant car page to them, and the full amount of the investment was returned two years after using the instant car page as the deposit, etc., but the share distribution ratio of profits under each of the respective investment contracts was 25% by the victim Nonindicted 1, 240% by the victim Nonindicted 3, and 40% by Nonindicted 3.

3) The victim Nonindicted 1 was transferred to the Defendant’s high school, and the victim Nonindicted 2 was first known by the introduction of the branch in relation to the above investment. The victims were aware that only Nonindicted 3 was the joint investors of the instant car page, and the victims were not heard from the Defendant regarding the existence of each of the victims.

4) At the time of the victims’ payment of the above investment amount, the Defendant assumed a debt of 1.1 billion won or more without any particular property. Meanwhile, on November 2009, the instant company newly leased the second floor of the room building used for the main office, the discharge pipe, and the art room, etc. around March 2010, and started construction of performance halls and practice rooms, etc. for rent use from around March 2010. On December 31, 2009, the liabilities were not paid for a considerable period of time due to the lack of financial conditions, such as the amount exceeding 240 million won of assets, and the rental deposit, rent and management fee of the room building was not paid for a considerable period of time, and the instant company was also in the state of deficit except for the Seoul Ka Pon store in operation.

5) However, the Defendant did not properly notify the victims and Nonindicted 3 of the financial resources of the instant company, the actual status of the operation of other carpets and art halls operated by the instant company, and notified the Defendant that the said investment would be used as usage fees of the instant carpet building, contract deposit, and interior construction cost, and most of the said investment amount was used as the construction cost of the second floor of the instant carpet building, for example carpets, and for the payment of profits to other carpets.

6) After that, Nonindicted Co. 4, a lessor of the building located in the building located in the relevant building, demanded the instant company to terminate the lease agreement and deliver the building on the grounds of unpaid rent, etc. on or around July 2010. The instant company agreed on the termination and reinstatement of the lease agreement on or around December of the same year, and removed from the said building.

B. Also, according to the reasoning of the lower judgment and the evidence admitted by the lower court, the following circumstances are revealed.

1) Although the Defendant received money from the victims and Nonindicted 3 for the joint operation of the carpet, according to each of the investment agreements, the instant company shall return the full amount of the investment money to the victims and Nonindicted 3 within 15 days after the lapse of the two-year investment period. In particular, the investment agreement with the victim Nonindicted 1 includes the contents guaranteeing a fixed amount of KRW 50,000 per month after the opening of the instant car page and then it is difficult to view it as pure investment money.

2) Although the instant car page began to be operated from August 2010, the Defendant used most of the investment funds received from the victims and Nonindicted 3 as the construction cost on the second floor of the instant car page, the rent for the wedding shop, and the profit-making to other carpet investors, etc., and later, the instant car page’s opening costs appear to have been partly appropriated from Nonindicted 5’s separate funds, etc. invested in the instant car page business, such as the management of the car page after the opening of the opening of the opening of the opening of the opening of the opening of the opening of the opening of the opening of the opening, such as the payment of the facility cost or the public charge, and the seizure procedure is proceeding for the facilities installed within the car page due to the payment of employees’ wages. Ultimately, the instant car page closed around December 2010, approximately four months since the opening of the opening of the opening of the opening of the business.

3) The victims and Nonindicted 3 did not make an investment in the overall business of the instant company, but intended to receive profits from their investment in the operation of the instant car page. Since investors are classified by business place operated by the instant company, if they knew that the said investment was to be used in other business place expenses, operating expenses, etc. of the instant company, it would have not been paid under the same condition.

4) Meanwhile, among the car page operated by the instant company from February 2010 to July 3 of the same year, the amount of KRW 5 million to KRW 6 million was reported, and the amount of KRW 700,000 to KRW 10,000 per month was reported from January 2010 to November 201 of the same year. However, from March 2010 to October 2010, the amount of KRW 90,000 per month was generated from March 2010 to October of the same year, each investment contract on the joint operation of the car page operated by the instant company, but the amount of KRW 75,00 per month was distributed to Nonindicted 6, the investor, and KRW 30,00 was distributed to Nonindicted 7, the investor, and each of the above profits could not be used for the victims’ payment of profits or the return of investments.

5) It appears that the instant company failed to commence the business of leasing performance halls and practice rooms on the wind that the lease contract of the instant building was terminated due to considerable progress in the construction of the second floor of the relevant building. However, in light of the circumstances where the instant company failed to pay the rental deposit, rent, and management expenses of the said building for a considerable period of time as seen earlier, it is difficult to deem that the Defendant could not at all anticipate the situation such as the termination and eviction of the lease contract of the said building at the time of the time when the victims paid the investment money. Furthermore, even if the construction of the second floor of the building was completed as planned by the Defendant, even if it was possible to rent performance halls and practice rooms, it is difficult to find that the instant company’s business was activated as a whole, and thus, the entire business of the instant company was paid the proceeds agreed upon to the victims, and that

6) Meanwhile, after the victims invested in the operation of the instant car page, the Defendant borrowed KRW 100 million from Nonindicted 8 to around July 2010 on the basis of operating expenses for the car page. Unlike the original purpose, the loan amount is used for operating expenses of the headquarters, such as the rent of the relevant building, the wages of employees, etc., and the construction of the said car page was not completed as scheduled.

C. Comprehensively taking account of these facts, the Defendant did not notify the victims of the funds themselves and the instant company’s financial resources, the actual status of the operation of other carpets and carpets operated by the instant company, the user of the investment funds, etc., or notified them differently from the fact in the process of expanding the carpets and carpets business in an unreasonable manner based on the investment funds without any particular property. The victims who did not know such circumstances believe that their investment funds should be used as the expense necessary for the opening and operation of the instant carpets. In light of the aforementioned legal principles, the Defendant paid the investment funds as above. In light of the above legal principles, even if the instant carpet-related business itself was not impossible, and the initial cost of the instant carpet-related business was a large amount of initial investment expenses, and thus the victims were dispositive acts by mistake, it is reasonable to deem that the Defendant’s act constitutes deception as referred to in fraud, and the victims were dispositive acts by mistake.

Unlike this, the court below erred by misapprehending the legal principles on deception, etc. as stated in fraud, and in violation of logical and empirical rules, which affected the conclusion of the judgment, on the contrary, that it is difficult for the defendant to recognize that he had induced or paid the investment money by deception from the victims. The ground of appeal pointing this out is with merit.

5. Conclusion

Therefore, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Yong-deok (Presiding Justice)